Inflated $69M NIS office in Corriverton… 6 years later, sections of roofing being replaced

Jan 21, 2018 News

Workers replacing sections of the roof on Friday.

Its construction was overshadowed by allegations of wrongdoings.

In May 2016, a key audit report found that the National Insurance Scheme (NIS) building at Corriverton, in Corentyne, Berbice, that was built for $69M was really worth $38M.

Now, a mere six years later, it appeared that in addition to be overpriced, poor work was also done.

On Friday, workers were seen on top of the building, replacing roofing sheets.

Workers would only say that there were some problems. It would signal that faulty works were done and signed off on by the supervisor of works with the contractor being paid.

The construction of the office, a key project by NIS in Berbice, under the previous administration of the People’s Progressive Party (PPP), was geared to help modernise the scheme’s satellite offices.

The construction of that branch was one of several instances that highlighted how things were handled under the previous NIS Board of Directors, the entity that is charged with administering social insurance for thousands of Guyanese.
A forensic audit report released in May 2016 by the Ministry of Finance on NIS, covering the period December 2011 to May 31, 2015, red-flagged several instances of direct interference by the Office of the President, into the affairs of the entity.
Many times, it seems, the decisions by Cabinet were handed down and the board accepted them without question.
Chairing the NIS Board of Directors for years until his party, the PPP/C, lost the early general elections in May last year, was Dr. Roger Luncheon. That official was also the Cabinet Secretary.
The Corriverton branch had made the news in a very bad way for the previous administration after documents relating to the construction revealed what appeared to be high costs for the building.
It was an embarrassment for NIS which is also facing tough financial times as its expenses are outstripping income.
According to the report, prepared by auditor HLB R. Seebarran & Co., the branch was reconstructed in 2010/2011 and commissioned in 2011 at a whopping cost of $69.9M.
The report said that NIS Board appointed a sub-committee called the Tender Evaluation Committee headed by a Director and including three independent parties- among them Samuel Goolsarran from the Consultative Association of Guyanese Industries.
A Consulting Engineer who was appointed provided an estimate of $50.6M to construct the building.
Two years after being built for $69M, this NIS branch at Corriverton, East Berbice was valued at $38M.

Auditors found that an advertisement was published in the press in April 2010. It is here that things got strange. The NIS Board decided to take it upon itself not to have the contract handled by the National Board for Procurement and Tender Administration.
Rather, the bids were handled by the Tender Evaluation Committee. The reasons given were delays in the procurement at the National Tender Board.
However, only two bids came in – Fyffe Building & Contracting Works $52.5M -3.7% above estimate and one from G. Bovell Construction Service for $112.8M or 222.6% above the estimate.

Dr. Roger Luncheon

The report said that Fyffe Building & Contracting Works was awarded the contract. The project was overseen by the Consulting Engineer and Building Maintenance Officer of NIS who played an integral part throughout the construction.
This was evident by the many reports he had submitted.
At a sub-committee meeting held on November 22, 2010, the then Chairman of the Board, Dr. Luncheon, was informed that a variation of $8.1M was required for electrical works and a generator which took the total cost to $60.6M.
According to the report, there were several issues during the construction as the contractor had difficulties meeting the deadline.
At a sub-committee meeting held on March 18, 2011, the Assistant General Manager informed the Board that a financial arrangement was worked out to have the scheme procure various items on behalf of the contractor.
Things did not improve and on May 20, 2011, the Chairman took several decisions including terminating the contractor’s services.
However, it appeared that the NIS Board then made an about turn, reversing that termination 10 days later.
It was explained that the Office of the President decided to keep the contractor as the project was in a desperate situation and was at its final stage.
It was also decided that an additional expenditure of $10M would be incurred and that the procurement of goods will be done by NIS.
The project was commissioned in 2011.
According to the forensic audit report, in 2013, a valuation of the property pegged the value of the Corriverton property at $37.9M compared to the cost of $69.9M, an impairment of $32M.
According to the forensic audit report, there was evidence that suggest unhappiness by the Board over the valuation of the Corriverton branch.
As a matter of fact, records included that NIS Finance Controller stopped External Auditors from working on the 2012 Audited Financial Statements.
However, the Board was later assured that the value of the property was accurate.
The Board then decided to leave the embarrassing valuation report from audited financial statements for 2012 and 2013.
The forensic auditor made it clear, in his conclusions, that the construction of this office was fraught with problems from the beginning.
The auditor also highlighted the Board’s questionable decision to terminate the contractor’s services but subsequently changed their minds because of interference by the Office of the President.